Carlyle, CVC to Share Fees with UBS for Client Access

Key Agreement Details

Private equity giants Carlyle and CVC have reportedly agreed to share performance fees with UBS. This strategic arrangement allows the Swiss bank to distribute their private investment products to its extensive network of high-net-worth clients.

According to a Financial Times report, the deals involve Carlyle sharing carried interest from an evergreen secondaries fund, while CVC will also share performance fees from a similar evergreen fund structure.

Market Context and Dynamics

These agreements highlight an intensifying effort by asset managers to tap into the private wealth market through established distribution channels. However, the model is not universally accepted, as the report noted at least two other major fund managers declined similar fee-sharing requests from UBS.

In response, UBS affirmed that its selection of private capital firms is strictly "based on our robust investment and due diligence process."

Impact on Investors and the Industry

Crucially, there is no suggestion that the fee-sharing agreements between the firms will lead to increased costs for the end investors. The structure appears to be an internal arrangement between the asset managers and the distributor.

This development may signal an evolving industry trend where large wealth managers leverage their powerful distribution networks to negotiate more favorable terms.

Summary

The partnerships underscore the growing competition among private equity firms to attract capital from wealthy individuals. This model of sharing performance fees could become a key factor for asset managers seeking access to the lucrative private wealth sector through major banking platforms.

FAQ

Q: What did Carlyle and CVC agree to with UBS?
A: They agreed to share a portion of their performance fees in exchange for UBS offering their investment funds to its wealthy clients.

Q: Does this deal increase costs for investors?
A: The report indicates there is no suggestion that the agreements will raise fees for the end investors.

Source: Investing.com